S&P downgrades Senegal credit rating to CC

S&P downgraded Senegal's sovereign credit rating to “CC” on Friday and assigned a negative outlook, citing a debt restructuring plan linked to the country's $2.2 billion agreement with the International Monetary Fund.

The ratings agency said the plan implied, in its view, that foreign-currency creditors would receive less than originally promised, whether through a reduction in principal, interest or payment terms.

“Consequently, we consider a distressed exchange or default on Senegal's foreign currency commercial debt to be extremely likely,” S&P said.

The IMF announced the loan agreement on Tuesday, but the bailout remains subject to conditions before approval by the fund's executive board. It followed the suspension of an earlier IMF program after previously unreported Senegalese debt was discovered.

Mercedes Vera Martin, a division chief at the IMF African Department, told AFP that “since the misreporting was identified, the authorities have taken efforts to improve the transparency.”

The IMF estimated Senegal's total public-sector debt at 132 percent of GDP at the end of 2024, making it one of the most indebted countries in sub-Saharan Africa. The IMF said in June that Senegal's overall fiscal deficit narrowed from 13.4 percent of GDP in 2024 to 6.4 percent in 2025, mostly because of spending rationalization.

S&P also lowered Senegal's long-term local-currency rating to “CCC,” saying it believed there was a possibility that sizable local-currency debt could be included in the restructuring plan.

“The negative outlook reflects the risks that local currency debt could be drawn into the restructuring process, because some creditors may challenge the proposed restructuring perimeter,” S&P said.

The issue is politically sensitive in Senegal. Former prime minister and current parliamentary speaker Ousmane Sonko has called any debt restructuring a “disgrace” for the country. Finance Minister Cheikh Diba has referred to planned changes as a “treatment plan,” avoiding the word restructuring.

Moody's last week cut Senegal's long-term foreign-currency debt rating to Caa2 from Caa1 while talks between Dakar and the IMF were still under way.